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SALVOS OF THE `THIRD INDUSTRIAL REVOLUTION'
We believe mergers such as the ones you mention ("Mergers today, trouble tomorrow?" Top of the News, Sept. 12) are just the first salvos in the third industrial revolution described by Harvard's Professor Michael C. Jensen. But we do not agree these mergers are about efforts to eliminate excess capacity. We believe the revolution is about two things: a major paradigm shift in technology and the need for U.S. companies to compete in a global economy.
In the proposed merger between Lockheed Corp. and Martin Marietta Corp., both companies are being squeezed--by the severe downsizing of the U.S. defense establishment, by trying to maintain costly technological research and development, and by the growing pressures of global competition. Such action is critical for the survival of both companies.
The Viacom Inc. and Paramount Communications Inc. deal is also about technology: making video and entertainment products for the electronic delivery systems of the present and near future. The merger is about delivering interactive products to home and office around the globe. While Viacom and Paramount work on products for the delivery system, other deals are being explored by computer, telecommunications, and media companies with utility providers such as electric, gas, and water companies.
It is our belief that these mergers will not slow innovation--but in many ways are a result of innovation. They are not about creating monopolies, as your article suggests.
William B. Seebeck